Electricity is a power source. Perhaps I should have said energy. Electricity is generally generated from fuel; but geothermal, wind, and solar are ostensibly different (granted, wind and solar are technically generated by solar nuclear fusion; and geothermal is generated by a magnetic field interaction causing friction, ultimately powered by solar nuclear fusion).
You say "short on cash" as if money means something. Money is a representation of labor. If you get paid $20/hr and I get paid $10/hr, you are able to use 1 hour of your time to buy 2 hours of mine. Things are made by a combination of fractional human labor time from many workers, and the minimum viable price is what pays the wages (really, to include cost of risks, which incur other labor and thus wages).
Machine cost is not lower than humans in all cases. Designing, building, maintaining, and powering a machine can actually cost more than just using humans. We could make a machine to form carbon fiber parts today, but it would be much slower than humans, and would require maintenance cycles and power such that the human labor to keep the machine running would exceed the fewer hours of human labor to do it all by hand; because of the complexity of properly-tooling for new carbon fiber parts, human labor is orders of magnitude more efficient than machine labor.
Machines doing everything from top to bottom and being automatically-cheaper than human labor is a Marxist fantasy. It doesn't actually work that way. The ideal is perpetuated by people who aren't engineers, but assume engineers are fully-capable of making new technology by willing it into existence on the spot, and that our overlords simply want power over other humans. Largely, the entire view is the same form of magical thinking as spiritual healing using the vibrational energy of crystals to tap the power of nature.
Also, slaves aren't cheap. To make a slave, you must first build a non-useful human for a decade or so. Child labor is inefficient, and child slave labor can help reclaim some of the cost of raising a slave; adult slave labor is much more efficient. After 12-15 years of wasting your resources, you've built a slave. Slaves require continuous maintenance to remain efficient: they must be fed, given medical care, housed, and otherwise tended to the bare minimum to make their labor effective. For manual labor slaves, they're little more than beasts of burden, and only need functional bodies enough to push and pull and lift things; more-complex tasks require slaves who are both obedient and competent. Sickness and injury are risks which can reduce the effectiveness of slaves permanently, and can't be repaired; replacement is, of course, expensive due to the food and care needs for a decade or so with no return.
The next step up from slavery is a free labor society. Free laborers work for an incentive--money, most familiarly, to represent their labor time (or exert pressure on others's labor time--that $20/hr vs $10/hr thing). Free laborers work to obtain the means to raise new laborers, which means that they provide labor (thus paying) for those costs involved in slaves. This diffuses the cost of producing a new laborer through the economy, whereas slavery places that cost onto the slave owner.
Free labor societies eventually develop enough wealth (via technical progress) to supply welfare. Technical progress reduces the labor required to make things, eventually diminishing the cost of stronger welfare systems to make them viable and even cheaper than old ones. Eventually, things like public healthcare and universal basic incomes (e.g. universal social security) become more-effective than food stamps or poor houses. This not only further diffuses the cost of raising a new free laborer across society, but also improves the health of the poor and, thus, reduces the rate of sickness and death among free laborers (mostly the poor). That reduction actually reduces the total labor in society invested in producing new l
Automating it into American factories would reduce the cost of the products. That wouldn't change the distribution of jobs--it wouldn't create new jobs (by having new workers) or eliminate jobs (by reducing total purchaseable products and concentrating American money into fewer American hands). No real advantage over Chinese manufacture unless you reduce the cost of products BELOW Chinese manufacture costs.
On the other hand, (hundreds of?) millions of Chinese workers would become unemployed and unemployable. Mass-poverty would strike China.
Finally, if the Chinese implemented the same automation, the reduced number of jobs required to operate the manufactories would reduce Chinese product prices below American product prices. Changing over at that time would avoid the reduced price: instead of creating more poverty, we'd avoid wealth (and thus avoid a reduction in poverty). It's still more poverty than the alternative, just not new poverty.
It's like saying what if I cut off your hand, but gave you a prosthesis? Why not give me a way to remote-control the prosthesis and let me keep my hand? Then I would have two hands and a robot servant, instead of just a replacement hand.
Uh. Wealth is essentially production, and is reflected by the buying power of income. A person's wealth is their buying-power income per time (e.g. annual income as a purchasing-power parity).
There aren't very many "Super-rich". The big CEOs and CFOs making millions aren't actually doing much damage, or at least not much in context.
For example, an earlier CFO of Ford Motors was taking about a $40 million total compensation package; $8 million of that is cash salary, bonuses, and dividends, while the rest is stock or stock options. Stock and stock options come from the secondary security market, devaluing the stocks investors hold; cash salary, bonuses, and dividends come from revenues, just like worker wages.
If you broke up that $8 million among Ford's employees, it'd be $53 per employee per year; $4.44/month; $2.05 per 2-week pay check; just over a dollar per week; or 2.7 cents per hour. Even with a dozen executives, you're still talking about 32 cents per employee per hour, or $640/year.
Stock options don't get taxed until exercised; stock issuance, exercised stock options, dividends, cash bonuses, and salary all get taxed by the IRS as immediate income. The gains made on stocks are further taxed as income if sold in the first year, or as capital gains (15%) if sold thereafter. Reinvested dividends are taxed as cash; when the stock is sold, the difference between its purchase price by dividend reinvestment and its current price at sale is taxed at the appropriate rate.
You still have people like Warren Buffet floating around, but not many. Their scope is limited because their actual income is limited: they may hoard tons of cash, but that cash has no real impact on the economy. Cash that's idle in bank accounts allows the banks to loan money; but that cash itself doesn't participate in the economy, and has exactly as much impact otherwise as all the billions and billions of dollars you might imagine Scrooge McDuck could have hoarded away if he were real.
Warren Buffet gets a lot of attention. He has a total net worth of $66 billion, but people like to say he earns $13.4 billion in a year. This is inconsistent; the truth is he holds $66 billion of Berkshire Hathaway stock, and a swing in that stock by a few percent can shove his current net worth up by billions. His actual income is mostly dividends... $62 million of dividends per year. That's actually $187 per Berkshire employee per year.
So Warren and Michael can't make much of a difference to anyone. When you get to Chipotle, their CEO is actually making $33.72 per employee per year; I miscalculated this at $3,600 before, which was hilariously off.
So yeah, long and short of it is none of these people have any significant or actionable impact on the economy. The money they're sitting on... they could spend it, and they'd cause inflation, but not a sustained increase in demand (so not more permanent jobs). You might see a job spike for a few years, an inflation crisis, and then an unemployment crisis.
Electricity and fuel are power plant and mining labor. All of those things are essentially labor (landlords might be charging a lot for profit, although landlord profits tend to be 30%-ish and not near-100% like Georgists like to believe).
Actually, I plan to cut full-time hours as a contingency activated for the risk of destroying the U.S. economy by making it too wealthy and creating too damn many jobs.
Cutting working hours doesn't increase technology--it doesn't reduce the amount of labor-time required to produce something. That means you have to employ more people to make the same things. To keep the same standard-of-living, you have to pay them more; but that's not actually possible: they're working 80% as many hours, but still have to pay 100% as many hours's-worth of wages to buy a product--they can only buy 80% as much.
In a situation where the United States consumer purchasing power actually increases greatly, you could create 118%-124% employment (negative unemployment). The labor shortage would destroy the economy. To prevent this, you hobble the economy by cutting full-time working hours. Somewhere in the range of 28-32 hours per week should leave people with a reduction in buying power sufficient to drop employment to 94.4%--a 5.6% unemployment rate.
In a general sense, you just suggested we respond to Americans becoming poorer by making Americans even poorer than that by paying them less and reducing their standard-of-living and quality-of-life. In a more-complete sense, you suggested reducing the total wealth available to the American people as a whole, which would collapse our job market and sharply-increase unemployment.
The consumer then pays that cost and no longer has that income to spend in that cycle.
There's this weird belief that spending money creates money, and so raising wages or some such will somehow create jobs. More-expensive products create less purchasing, and so destroy jobs. When you pull jobs back from an import market, you can create or destroy jobs in total; but the overall effect, guaranteed, in increasing the cost to make products is a decrease in wealth.
The best part? Malthusian population growth will adjust out any new jobs you create or any jobs you lose in the process. More jobs? Population expands until you get back to your stable unemployment rate. Fewer jobs? Population growth slows until it adjusts for your level of wealth and returns to your stable unemployment rate. Five years later, the only thing you've gained is an increase in poverty.
Automation requires fuel and maintenance. The machines to build things can be complex, and have to be retooled when things change. The flexibility of a machine for retooling affects its cost of ownership; and its rate of manufacture affects how many such machines you need so as to produce things at a certain rate.
If you need 1 machine to produce 1,000,000 things per year, then retooling after the design changes in a year costs what it costs to retool 1 machine. If that machine is slow and produces 1,000 things per year, you need 1,000 such machines, and the retooling cost is 1,000 times as high. Likewise, all of those machines need maintenance; and machines performing complex assembly require more maintenance to keep reasonable tolerance so as to produce correct products. This requires both machinists and inspectors to look at the machines constantly and identify if they're out of tolerance; in a steel pressing facility making sheet metal, you can have an inspector test a roller for tolerance as frequently as once every half hour.
Slower machines also require more fuel, because they have a base load just to operate.
In the end, you have all these costs besides initial investment, and they're all variable based on what kind of technology you get. The little deficiencies multiply together, and they're sensitive to market forces. Humans have zero retooling costs for vaguely-similar work, while machines have to be retooled to assemble the same components on a different bike frame.
Machines essentially have a wage; it's just paid out to all the humans involved in keeping the machine doing its job.
Actually, Chinese manufacture doesn't start until the Chinese companies provide consultation time with your engineers to rework your product's minor details in such a way as to maximize product quality for a given cost while minimizing cost by improving manufacture speed and reducing manufacture labor.
Chinese manufactories regularly work closely with engineering teams to rework an engineered circuit board into the same circuit with a different physical layout, strengthening weak parts and eliminating complex manufacture steps. That means the end product doesn't fail as often and costs less to make. You also see things like what Kokoon is currently publishing about their experiences, where different materials or assemblies are selected to make a part assemble more-rapidly and prevent it from wearing out as quickly, which, again, both cuts costs and extends the product's lifetime.
The Chinese make efficient use of both human labor and machines. They're very good at manufacturing.
A cup of coffee requires the barista's labor, the manager's labor, the roasted bean shipper's labor, the roaster's labor, the green bean shipper's labor, the farmer's labor, the chemist's labor (Fertilizer, pesticide), the fuel producer's labor (farm tools, building power, roasting machines), machinist labor, oil miner's labor, power plant engineer labor, water distribution labor (municipal water supply, irrigation), logistics to move all this stuff, payroll, bankers, and the people making the cups.
If we're forming the plastic casing here, that's less-efficient.
Shipping cost is pointless, anyway. The shipping cost of a 40-foot shipping container for import to the U.S. from China is under $1,300; it can carry 40,000 trousers or jackets, at a 6.5 cent per-unit price. The import share of those articles is $6.12--at $3.50/hr Chinese labor, including wages and social insurances.
You're shipping a lot of styrofoam and air in an Insignia TV box.
Most companies (Apple and Microsoft being notable exceptions) have narrow or unstable margins (and even Microsoft has a cycle of loss years and profit years). The average profit margin in U.S. in total is 10%; 90% of income goes to wages.
All wages are paid from revenues; revenues are paid from sales; and sales are paid from income. Making a product requires labor from many people, fractioned together. If you have 100 people at $10/hr making 1,000 widgets per hour, that widget costs $1, and can have a price no lower than $1. Each of those people, in that 1 hour, makes enough money to buy 10 such widgets.
In one sense, those people are trading widgets for other widgets (or food). In another sense, they're trading labor for labor (time). When you make $20/hr, you're essentially trading 1 hour of your time for 2 hours of theirs.
That means money is kind of a closed system. There's a limited amount of income in any time frame, which determines what can be bought and what jobs can exist at that technology level. When you add in trade, you're moving income between isolated trading partners, which works the same way. Central banks can issue more money, allowing banks to give loans, allowing consumers to spend more, which adds money to the system; however, this counters technical progress (which causes deflation) and enables inflation (which makes your loan payments shrink in purchasing power over time). In the end, you're still dealing with trading hours for hours; mucking about with money just creates (and modifies) a representation of that time.
It gets more complex than that.
We can modify time.
Over a 100-year span of time, you can safely increase the level of technology such that productivity goes up by 10 times. If, overnight, you double productivity, then you have a need for half as many workers, and get instant 50% unemployment (this is the fear with automation); that collapses your economy. If you do this slowly over years, you create some unemployed, and then create a need for more jobs as prices fail to keep with inflation: your costs drop because the same wages are paying for less time, so the wage cost lowers, and market pressures still set you at the same general profit margin.
So you get enough technical progress to make 10 times the stuff in the same labor. The same proportion of dollars doesn't reflect the same buying power; or, to put it simply, 1 hour of labor buys 10 times as much stuff. That means even a 10% profit margin is 10 times bigger, because it's 10% of money representing the labor costs of making a thing, and that's kind of huge.
So the answer to your question is complex. The short answer is the profit margins stay the same, in the long-run; and the prices go up to adjust for rising costs (or down to adjust for falling costs--though "down" can be slower if the market isn't experiencing a flurry of change and competition). Those margins would actually have less purchasing power if industries have higher costs.
In the long-run, technical progress as I described drives the entire progression of economies. In the short-term, wage inequality and other opportunistic behaviors create fluctuations. It looks something like this. Trade tends to lower prices; Malthusian growth tends to adjust out any jobs you gain or lose through trade deals etc., so both the job creation argument and the job loss argument (we'll lose jobs if we pay American workers over a certain wage to replace Chinese manufacture--it's $18/hr for men's cotton pants, for example) are meaningless.
Rising costs mean more poverty and poorer people--not poorer rich people, but poorer consumers who have to barter their time against the time of other working-class workers. It is mathematically-impossible to disconnect wealth from the total wage cost of making products.
I've been casually studying lately, and might want to go for an AA in economics just to round out; but mostly, I've looked through economic history and at economic systems, and worked out how everything is connected. The stuff I came up with was insanely beyond everything I'd ever been taught about economics (it's a basic concept in school, hence why everybody knows about supply and demand), but then people started talking about Malthus and pointing to more modern theories, and I realized the gap is a lot smaller.
There is a ceiling on the production capability of SK that is dependent on the total number of assembly lines available for operation.
Yes and no. This is a concern, of course; and you're in principle right.
There is a ceiling on the production capability of anything, and it has to do with the supply chain. In middle-school economics, they tell people scarcity is when demand exceeds supply; it's more-complex than that.
Food, for example, becomes scarce even when the supply of food can easily exceed demand; and an increase in demand causes an increase in supply, until it doesn't. Food becomes scarce when producing a bigger proportion of food (e.g. 10%) requires a larger-than-proportional increase in labor (e.g. 12%), which may happen because fertile land in the proper climate is scarce, or such; and of course you can relieve that by things like fertilizer, pesticides, and GMOs, using the land more-efficiently rather than adding more land. You can still produce more than enough food, just at higher cost; and of course the limit is a matter of rate (else you could use less land) and labor (you NEED more labor to make the same amount of food on lower-yielding land).
So this description of scarcity suggests maybe land is scarce, except you can find a way to use the same amount of land. Labor is available; but more labor costs more. There isn't a limiting good here per se, although land is the closest thing to it; food is what's become more-expensive above a certain demand, however, so food is scarce.
The same happens for production of anything. SK can build more assembly lines for higher production output if that production demand is stable; however, SK will run out of laborers to fill its own needs eventually, or will run out of supply chain goods, or some such. If it's cheap to make chips in SK because SK has a silicon mine (uh, just go with it), it may cost more than twice as much to haul up silicon twice as fast, thus exceeding a certain rate of production causes an increase in labor requirements and thus you have scarcity again. So on and so forth.
The things we get from SK are cheap because they're capable of producing them at the rate needed (not scarce), and because demand is high (many manufactories competing for that profit opportunity). If SK only had 2 or 3 manufactories running at moderate capacity to service minimal demand for specialized goods, there wouldn't be much competition between them--because you're always one customer, everyone's manufactories have 10-year contracts for goods, and those goods are only needed for a few purposes and thus new contracts rarely appear. There are markets that work this way.
During this ramp-up time, prices will either rise, or there will be supply-shortages
Not a long-term stable state. You've made an argument that sudden demand will cause predictable problems, along with some less-predictable ones. That's a valid argument--that's exactly the kind of thinking you should employ when faced with any new situation, because risks must be identified and controlled--but it wasn't my point, and it doesn't make the iron-clad conclusion that more demand means more expensive SK goods. SK isn't necessarily at-capacity.
major shifts in global trade result in massive side effects
That's an extreme reduction. Intel also builds electronics (chip fabricators) in the U.S., although they're a hell of a lot more expensive than Taiwanese and Korean fabricators--and not just because Intel wants a wide profit (although that's some of it).
The short of it is wages are paid from revenue--from the sale of products. A product's minimum viable sale price is determined, in part, by what share of labor produces it. Let's say 100 people work in a factory at a wage rate of $10/hr, and their work collectively produces 1,000 things per hour. That's 1/1,000 of 1 hour of work per person per thing (3.6 seconds per person), totaling 6 minutes of human labor to make that thing, or $1 per thing made. To pay those workers's wages, you must sell that thing for at least $1 each. Take note you also have to pay for things like maintenance, electricity, the shipping and fuel mining to keep your factory running, and so forth--everything eventually coming down to some human labor somewhere at some wage rate.
Extend this through an entire economy and you have a bunch of people trading their labor time for other labor time. People make different wages--an assertion that their labor is worth more than your labor, and so they work 1 hour and you should give them 2 hours of your labor in compensation. Labor is time, and can't be boxed up and traded; hence we represent this with money.
We have 2% inflation per year. The Federal Treasury adjusts interest rates and issues more money. The banks then can lend money to people today to buy houses and cars which they'll pay off with future labor. That money gets spent, eventually finding its way to workers.
So what happens?
In any given frame of time, all of the income equates to all products and services sold, and all labor used. Note that, in the United States, imports (import goods, outsource labor) aren't counted as income: the business deducts that expense, and another business (or wage worker) in another country receives that money and doesn't report it to the IRS. It's not counted as Personal Income or Taxable Income. That means 100% of all measured income in the United States represents all wages and profits, and all products and services produced and sold in the United States, without representing any foreign labor used, and including any exports. Basically, that's GDP.
If you increase some subset of wages, you increase the labor share of the cost (and price) of a product. That means less to spend on other stuff, thus fewer things bought, less labor, less production, less wealth, less employment.
So Men and Boys's Cotton Trousers and Shorts, Chinese imports. Average $6.12 labor share (import cost is under $1,300 for a 40-foot shipping container containing 40,000 trousers or jackets--6.5 cents per each). Average sale price is $14.97; average Chinese labor worker hour (wages plus social insurance taxes) is $3.50/hr. American GM line worker wage is $21/hr; with payroll taxes and benefits (18%--benefits are as high as 40%, but let's not inflate the numbers), you're talking about $50.57 per pair of pants, on average. With minimum-wage workers, you're talking just over $25, rather than $15.
This gets ridiculous when you start talking about Korean and Taiwanese LCD panels, integrated circuitry, and the like. The labor share of the import is $487 for a $500 50-inch TV. The same adjustments get you a $3,200 TV; it might be as little as $1,400, using some extreme assumptions about just how much we can abuse our American factory workers.
Here's the rub: Malthusian population growth describes populations growing faster in abundance, and slower when not in abundance. In context, that means jobs lost to or gained from trade (either can happen) are buffed out over time: 5 years after new trade creates a boom of new jobs, there's enough active labor to fill us back to 5% unemployment; 5 years after new trade sucks away 100,000 American jobs, the labor force has shrunk already. The labor force
America has the concept of case law, in which we determine what the law was supposed to do, and whether it makes sense in context. That's why we have things like the reasonable person test, and why we might identify that "conversation is not copyrightable" and "conversation is only possible via written word in this context" would lead a court to decide that said written word is not copyright, while also pointing to a poem in the middle of said written word and claiming that is a creative work and is thus copyrighted even though everything else in the message isn't.
If it didn't work that way, you could lie in courts and commit fraud under the defense of freedom of expression. A lot of Americans like to abuse the ideal of freedom of speech and claim a bunch of legal shit because of a lack of understanding of the law like that. That misunderstanding is also why we got the whole religion argument (e.g. a courtroom can't display a religious symbol like a cross or a statue in America): people interpreted "freedom of religion" by way of "congress shall make no law restricting the free exercise of religion" to mean "freedom from religion", and claimed separation of church and state is in the constitution, and that the government can in no way display any sort of religion-related thing. The courts actually upheld that one, even though it's ludicrous.
Our legal system is complex because case law overrides all law, including constitutional law--the Supreme Court will rule on if a ruling or law is constitutional, and thus decide what the constitution means by what it says. State law trumps Federal law, except we pretend it doesn't; and constitutional law outlines the limits of Federal and State legal powers, including that any powers neither explicitly granted to the Federal government nor forbidden from the States fall to the States or the people in the states. Then you have loonies who think the Constitution is a perfect, inviolable, holy scripture that can in no way be incorrect or sub-optimal, and claim anything they don't like is wrong because "it's unconstitutional". They seem to forget the constitution originally allowed states to ban women and black people from voting--things we fixed by a complicated legal process of ratifying new amendments to the constitution by a vote of the states.
Our laws are complex. Our legal system has some serious flaws.
Actually, the higher the wages you pay, the fewer net jobs you create. My calculations on Men and Boys's Cotton Trousers and Shorts (MBCT) imports suggest an $18/hr average wage for the entire chain (factory workers, power company supply chain, engineers, machinists, managers, etc.) with an 18% benefits cost (benefits should range 18%-25% of salary, but often range 25%-40%) is break-even against a $3.50/hr Chinese labor cost (wage plus social insurance taxes) and a $14.97 average retail price across all imports in that class.
That is to say: if you pay more than $18/hr, you net lose American jobs; if you pay less, you net-gain American jobs. This actually doesn't matter in the long-run, and I'll cover the mechanics below just for completeness.
A GM factory line worker makes $21/hr. At that rate, you would lose around 8,500 American jobs. The $14.97 average price would rise to $50.57, based on $6.12 labor share for MBCT--that's derived by dividing the import price by the number of units. Note that importing a 40-foot shipping container with 40,000 jackets or trousers from China costs under $1,300 or 6.5 cents per unit. If we assume $8.50/hr American minimum wage, the new price of trousers is just over $25.
So that's all interesting, but I said the jobs don't matter.
Malthusian growth: in abundance, population expands; when abundance ends, population growth slows. I had derived this behavior from an examination of scarcity, which I defined as a condition where the labor required to make proportionally more of a good in a certain time frame would increase by a greater proportion. As a simple example: if you grow your population by 10%, you need 10% more food. Food prices stay the same if the number of people in your population making food increases by 10% (so if it's 100,000 farmers, now you need 110,000). If that increase is more (e.g. 112,000--a 12% increase), food is scarce.
My scarcity model above essentially means we can definitely make enough e.g. food for everyone, but increasing food production increases the total percent of all of our labor (and income) spent on food, decreasing what other things we buy. That means more poor people--people who can afford food, but not as much of other things (luxuries)--as well as current poor people struggling to afford food, and some outright failing. We can make it to fill demand, but it's getting pricier.
So imagine jobs become scarce or abundant. Malthusian growth means more or fewer early retirements, higher or lower birth rates, changes in immigration, death by poverty, and so forth tends to eliminate all those extra jobs or all those extra job seekers. Give it a few years (not even a generation) and it no longer matters.
What does matter is those pants costing more. That rise in per-unit cost and thus price is scarcity in practice. Trade is... annoying, when you want spherical cows. Everything I outlined about scarcity holds true over decades; and the short-term instead has dissimilar labor rates. Yes, you can definitely produce more if you need fewer labor-hours to do it; but if you have $20/hr labor vs $10/hr labor, spending the cheap labor for less than twice the time will get you lower prices. It's not strictly-optimal.
More-expensive pants does mean we spend more of our total income on pants.
Income is a rate function: there is only so much income in a given time. Raising a subset of wages concentrates that income in fewer hands, destroying jobs; raising all of those wages requires more money (inflation). Wages essentially pay for a quality-of-living based on a certain amount of time; and revenue pays wages, so higher wages require higher revenue, thus higher prices per product produced using a certain method (technology). That means money's purchasing power is tied to wages and technology; money isn't wealth, and tweaking the amount of money without changing anything else doesn't create wealth.
There are many different manufactories in China and Korea. Because of high demand, getting into the manufacturing business--and taking on clientel--is less-risky, and the long-term cost is low. You're not making specialty goods or a specialty service; you are a bulk commodity for which there is huge demand, and you have to deal with competitors who can flourish right along side you--meaning it's one of the other 5,000 firms nabbing your business, instead of some high-risk new-kid company trying to squeeze it's way in as the cheaper alternative.
The prices are set based on cost. There's generally a certain amount of risk in business, including threats (financial losses) and opportunities (market expansion). Those risks have a long-running average, and so need a certain amount of excess profits to cover: your profit has to exceed losses to threats, and has to allow the taking of new opportunities.
To minimize costs of risk, you reduce threats. Opportunities are a more-complex matter: you need more cash flow to pursue them, and you need enough of it to cover the opportunity and the threats. Minimizing your threats means you can take an opportunity without risking a compounding of costs as threats appear soon after, thus a similar amount of profit allows you to grow rapidly, and that growth then raises your profits over your threats. That's because 10% profit is 10% of your business, and 100% growth (doubling in revenue) means your 10% profit represents 20% of your pre-growth business, while your 1% risk cost represents 0.1% of your pre-growth business or 0.05% of your current-size enterprise. You can catch up on risks if you can grow faster than they can mount, including threats (bigger business = recover those small lost costs faster) and opportunities (bigger business = more cash flow to outlay on new opportunities).
So prices come down to market pressures from competition, which increase with more demand; and costs, which include risks and labor. Outsourced services (buying from other companies) includes the provider's profits, which are a function of these things as well (negotiation pressure is a function of demand). Scarcity is a matter of cost, as well: typically, supply chain issues aren't so much as "running out" as they are that you can get more if you can pay more people (e.g. a mine that has all of its rich ore veins mined out produces half as much ore per cubic meter of volume dug? You have to dig twice as much for the same ore--and pay twice as much salary, since you need the diggers working twice the man-hours).
No, US people are just dumber than the rest of the world and were sold a line about houses doubling in value every 2-3 years and making them rich as all hell if they bought and then sold in 2 years.
When a bank sells debt, they're still the contracted collector for the income; they simply owe the income on the bond to the purchaser.
Here's the thing: comments on a forum have never been successfully defended in U.S. courts. Speeches--being the creative work of a speechwriter--have been defended; but the USCO has determined speeches given but not written down aren't copyrightable because they aren't a fixed work--even though those speeches are recorded through the incident of being at a public event. The recording is copyrighted--to whoever owned the camera (e.g. CBS); the speech wasn't prepared and fixated, so isn't copyrighted.
Were you to record your speech and then televise it, the recorded speech and its transcript would be copyrighted. It's also copyrighted to you if you have your own people record it, if you had planned to give a speech; yet doing the same in a debate fails to produce a copyrighted work for the speaker, because the speaker's dialogue wasn't a prepared work, and is an incident of the venue (but not owned by the venue).
So the law essentially says speeches are copyright, but not if they're basically given on-the-spot or from memory of a worked speech which you hadn't previously fixated by writing it down or recording it yourself, except in the case where you had appeared on the occasion for the purpose of giving a speech and having it recorded as a fixed work.
Slashdot is a venue. You're having a discussion, which is dialogue. That dialogue is becoming a fixed work at that time. As per the above behavior with speeches and debates, this would be non-copyrightable; and, additionally, the venue only engages through the medium of a fixed work--that is, you can only communicate on the Internet by creating a fixed work (a recording, text, etc.)--therefor jurisprudence would suggest that copyrightability of publicized discussions on the Internet should examine if they are substantially-similar to verbal public discussion. They are.
The only people who have ever claimed forum posts, youtube comments, and the like are copyrightable are forums operators and forum users discussing the copyrightability of their posts. No court has ever found in favor of copyright action against the impromptu text of a forum discussion--although any images you upload as attachments and whatnot, or any works contained therein (e.g. poetry), are obviously copyrightable because they are a separate work embedded into a discussion.
Copyrightability hinges essentially on what is considered a "creative work". A discussion is not considered a creative work. To claim copyright, you must claim that something isn't a discussion.
Ah okay. That seems strange; Canada doesn't seem like a country that would have weak enough regulations for that. Managing interest risk is a huge and complex topic, and most consumers aren't well-educated on the topic; if you were well-educated on every such topic, have 19 Ph.D.s.
In America, banks take interest risk when they give you a fixed-rate mortgage: a change in interest rates means the bank can sell your loan to another bank for more or less money. That means the bank's assets change, and it means capitalization by selling a loan works differently. If interest rates go up and you hold a low-interest loan, then the value of that loan falls. This is important because a loan is an asset: it's an Accounts Receivable, meaning the balance belongs to the bank, and so the bank owns that money. Interest is income, and the portion of your payment that pays the loan down isn't income. The bank can sell that loan to another bank for a portion of the expected interest and take a capital gain, allowing the bank to immediately access liquid funds; but the buyer will want a bigger discount if the interest rate is lower than current rates.
In the U.S., we have 30-year and 15-year fixed-rate mortgages. You pay a higher interest rate on a 30-year than a 15-year; and you pay a higher interest rate on a fixed-rate loan than you do on an adjustable-rate mortgage. This is because a 15-year loan takes a risk across 15 years; the 30-year loan takes risks 15 years beyond that, which are harder to predict, and thus more dangerous.
ARMs are cheaper. A 30-year fixed rate might be 4.25% while a 5/5 ARM is 4.125%. When you buy an ARM, you and the bank make a contract: you agree to a certain exposure to risk, and the bank agrees to limit your risk. For Penfed's 5/5 ARM, the limits are that your interest rate can adjust only once every 5 years, only increase by 2% in any adjustment, and only increase by a total of 5% above the original interest rate over the entire life of the loan. The bank takes interest risk in that every 5-year span following an adjustment is subject to market fluctuations yet does not subject your loan to interest rate adjustments, and that the amount of adjustment they can make is limited. This is better for the bank than zero adjustment, and it's better for you than the bank changing the interest rate however they want whenever they want.
You can take an ARM when you think you can manage the risk. For example: a 3/1 ARM exposes you to a hell of a lot of risk; while a 5/5 ARM with a 2% or 1% maximum adjustment lets inflation and pay increases more-effectively diminish both the buying power and the proportion of your income represented by the increased payments at each adjustment term. A 15/15 ARM exposes the bank to more risk, and costs you more; but it also lets you get a full 15 years of inflation and pay increases before a larger (6%) adjustment comes. You might also plan to use the lower payments on a 5/5 loan to make extra payments, bringing you under the cost of a 30-year fixed even with maximum adjustments.
If you don't know any of this shit, you essentially pay the bank to cover your risk. The bank charges you more interest and takes bigger payments, and in return they assume 100% of the interest rate risk.
That means a fixed-rate loan allows a wholly-ignorant consumer to avoid planning long-term financial management and preparing for financial risk events over periods spanning decades, instead telling some highly-skilled statisticians at the bank to figure out how much risk there is and adjust it into the loan. The uneducated consumer just has to ask, "Can I afford this, and is my income probably stable or growing over the next 15 or 30 years?" He doesn't have to look at ARM adjustment periods and lifetime maximums and determine what his income will look like and how he can mitigate any increases to improve his financial position. He also doesn't risk being wrong--such as by determining he'll come ahead with an increase up to 1.4% in 5
You have 100% control over the loan terms. US Bank offerings include conventional (fixed) and ARM. Penfed has better offerings, with 15/15 and 5/5 ARMs. Penfed's 5/5 ARM declares the following:
Rate is variable and can increase by no more than 2 percentage points after the initial five year period and at each subsequent rate adjustment, with a lifetime maximum adjustment of 5%
So a Penfed 5/5 ARM taken in 2015 at 4% can increase to 6% in 2020, 8% in 2025, and only 9% in 2030; that loan would be contractually-prohibited from increasing at a faster rate, and from increasing above 9%. Penfed's 3/1 ARM also allows 2% adjustments, to a maximum of 6%. Their 15/15 can increase by a maximum of 6% points, once, at 15 years (e.g. a 2015 mortgage at 4% can increase to 10% in 2030, but no higher).
Well don't buy an adjustable-rate mortgage. What country do you live in that makes you enter a 30-year contract that involves a lot of debt and give the seller the right to change how much you're contractually-obligated to pay?
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Electricity is a power source. Perhaps I should have said energy. Electricity is generally generated from fuel; but geothermal, wind, and solar are ostensibly different (granted, wind and solar are technically generated by solar nuclear fusion; and geothermal is generated by a magnetic field interaction causing friction, ultimately powered by solar nuclear fusion).
You say "short on cash" as if money means something. Money is a representation of labor. If you get paid $20/hr and I get paid $10/hr, you are able to use 1 hour of your time to buy 2 hours of mine. Things are made by a combination of fractional human labor time from many workers, and the minimum viable price is what pays the wages (really, to include cost of risks, which incur other labor and thus wages).
Machine cost is not lower than humans in all cases. Designing, building, maintaining, and powering a machine can actually cost more than just using humans. We could make a machine to form carbon fiber parts today, but it would be much slower than humans, and would require maintenance cycles and power such that the human labor to keep the machine running would exceed the fewer hours of human labor to do it all by hand; because of the complexity of properly-tooling for new carbon fiber parts, human labor is orders of magnitude more efficient than machine labor.
Machines doing everything from top to bottom and being automatically-cheaper than human labor is a Marxist fantasy. It doesn't actually work that way. The ideal is perpetuated by people who aren't engineers, but assume engineers are fully-capable of making new technology by willing it into existence on the spot, and that our overlords simply want power over other humans. Largely, the entire view is the same form of magical thinking as spiritual healing using the vibrational energy of crystals to tap the power of nature.
Also, slaves aren't cheap. To make a slave, you must first build a non-useful human for a decade or so. Child labor is inefficient, and child slave labor can help reclaim some of the cost of raising a slave; adult slave labor is much more efficient. After 12-15 years of wasting your resources, you've built a slave. Slaves require continuous maintenance to remain efficient: they must be fed, given medical care, housed, and otherwise tended to the bare minimum to make their labor effective. For manual labor slaves, they're little more than beasts of burden, and only need functional bodies enough to push and pull and lift things; more-complex tasks require slaves who are both obedient and competent. Sickness and injury are risks which can reduce the effectiveness of slaves permanently, and can't be repaired; replacement is, of course, expensive due to the food and care needs for a decade or so with no return.
The next step up from slavery is a free labor society. Free laborers work for an incentive--money, most familiarly, to represent their labor time (or exert pressure on others's labor time--that $20/hr vs $10/hr thing). Free laborers work to obtain the means to raise new laborers, which means that they provide labor (thus paying) for those costs involved in slaves. This diffuses the cost of producing a new laborer through the economy, whereas slavery places that cost onto the slave owner.
Free labor societies eventually develop enough wealth (via technical progress) to supply welfare. Technical progress reduces the labor required to make things, eventually diminishing the cost of stronger welfare systems to make them viable and even cheaper than old ones. Eventually, things like public healthcare and universal basic incomes (e.g. universal social security) become more-effective than food stamps or poor houses. This not only further diffuses the cost of raising a new free laborer across society, but also improves the health of the poor and, thus, reduces the rate of sickness and death among free laborers (mostly the poor). That reduction actually reduces the total labor in society invested in producing new l
Complex.
Automating it into American factories would reduce the cost of the products. That wouldn't change the distribution of jobs--it wouldn't create new jobs (by having new workers) or eliminate jobs (by reducing total purchaseable products and concentrating American money into fewer American hands). No real advantage over Chinese manufacture unless you reduce the cost of products BELOW Chinese manufacture costs.
On the other hand, (hundreds of?) millions of Chinese workers would become unemployed and unemployable. Mass-poverty would strike China.
Finally, if the Chinese implemented the same automation, the reduced number of jobs required to operate the manufactories would reduce Chinese product prices below American product prices. Changing over at that time would avoid the reduced price: instead of creating more poverty, we'd avoid wealth (and thus avoid a reduction in poverty). It's still more poverty than the alternative, just not new poverty.
It's like saying what if I cut off your hand, but gave you a prosthesis? Why not give me a way to remote-control the prosthesis and let me keep my hand? Then I would have two hands and a robot servant, instead of just a replacement hand.
Uh. Wealth is essentially production, and is reflected by the buying power of income. A person's wealth is their buying-power income per time (e.g. annual income as a purchasing-power parity).
There aren't very many "Super-rich". The big CEOs and CFOs making millions aren't actually doing much damage, or at least not much in context.
For example, an earlier CFO of Ford Motors was taking about a $40 million total compensation package; $8 million of that is cash salary, bonuses, and dividends, while the rest is stock or stock options. Stock and stock options come from the secondary security market, devaluing the stocks investors hold; cash salary, bonuses, and dividends come from revenues, just like worker wages.
If you broke up that $8 million among Ford's employees, it'd be $53 per employee per year; $4.44/month; $2.05 per 2-week pay check; just over a dollar per week; or 2.7 cents per hour. Even with a dozen executives, you're still talking about 32 cents per employee per hour, or $640/year.
Stock options don't get taxed until exercised; stock issuance, exercised stock options, dividends, cash bonuses, and salary all get taxed by the IRS as immediate income. The gains made on stocks are further taxed as income if sold in the first year, or as capital gains (15%) if sold thereafter. Reinvested dividends are taxed as cash; when the stock is sold, the difference between its purchase price by dividend reinvestment and its current price at sale is taxed at the appropriate rate.
You still have people like Warren Buffet floating around, but not many. Their scope is limited because their actual income is limited: they may hoard tons of cash, but that cash has no real impact on the economy. Cash that's idle in bank accounts allows the banks to loan money; but that cash itself doesn't participate in the economy, and has exactly as much impact otherwise as all the billions and billions of dollars you might imagine Scrooge McDuck could have hoarded away if he were real.
Warren Buffet gets a lot of attention. He has a total net worth of $66 billion, but people like to say he earns $13.4 billion in a year. This is inconsistent; the truth is he holds $66 billion of Berkshire Hathaway stock, and a swing in that stock by a few percent can shove his current net worth up by billions. His actual income is mostly dividends... $62 million of dividends per year. That's actually $187 per Berkshire employee per year.
So Warren and Michael can't make much of a difference to anyone. When you get to Chipotle, their CEO is actually making $33.72 per employee per year; I miscalculated this at $3,600 before, which was hilariously off.
So yeah, long and short of it is none of these people have any significant or actionable impact on the economy. The money they're sitting on... they could spend it, and they'd cause inflation, but not a sustained increase in demand (so not more permanent jobs). You might see a job spike for a few years, an inflation crisis, and then an unemployment crisis.
Try again?
Electricity and fuel are power plant and mining labor. All of those things are essentially labor (landlords might be charging a lot for profit, although landlord profits tend to be 30%-ish and not near-100% like Georgists like to believe).
Actually, I plan to cut full-time hours as a contingency activated for the risk of destroying the U.S. economy by making it too wealthy and creating too damn many jobs.
Cutting working hours doesn't increase technology--it doesn't reduce the amount of labor-time required to produce something. That means you have to employ more people to make the same things. To keep the same standard-of-living, you have to pay them more; but that's not actually possible: they're working 80% as many hours, but still have to pay 100% as many hours's-worth of wages to buy a product--they can only buy 80% as much.
In a situation where the United States consumer purchasing power actually increases greatly, you could create 118%-124% employment (negative unemployment). The labor shortage would destroy the economy. To prevent this, you hobble the economy by cutting full-time working hours. Somewhere in the range of 28-32 hours per week should leave people with a reduction in buying power sufficient to drop employment to 94.4%--a 5.6% unemployment rate.
In a general sense, you just suggested we respond to Americans becoming poorer by making Americans even poorer than that by paying them less and reducing their standard-of-living and quality-of-life. In a more-complete sense, you suggested reducing the total wealth available to the American people as a whole, which would collapse our job market and sharply-increase unemployment.
The consumer then pays that cost and no longer has that income to spend in that cycle.
There's this weird belief that spending money creates money, and so raising wages or some such will somehow create jobs. More-expensive products create less purchasing, and so destroy jobs. When you pull jobs back from an import market, you can create or destroy jobs in total; but the overall effect, guaranteed, in increasing the cost to make products is a decrease in wealth.
The best part? Malthusian population growth will adjust out any new jobs you create or any jobs you lose in the process. More jobs? Population expands until you get back to your stable unemployment rate. Fewer jobs? Population growth slows until it adjusts for your level of wealth and returns to your stable unemployment rate. Five years later, the only thing you've gained is an increase in poverty.
Automation requires fuel and maintenance. The machines to build things can be complex, and have to be retooled when things change. The flexibility of a machine for retooling affects its cost of ownership; and its rate of manufacture affects how many such machines you need so as to produce things at a certain rate.
If you need 1 machine to produce 1,000,000 things per year, then retooling after the design changes in a year costs what it costs to retool 1 machine. If that machine is slow and produces 1,000 things per year, you need 1,000 such machines, and the retooling cost is 1,000 times as high. Likewise, all of those machines need maintenance; and machines performing complex assembly require more maintenance to keep reasonable tolerance so as to produce correct products. This requires both machinists and inspectors to look at the machines constantly and identify if they're out of tolerance; in a steel pressing facility making sheet metal, you can have an inspector test a roller for tolerance as frequently as once every half hour.
Slower machines also require more fuel, because they have a base load just to operate.
In the end, you have all these costs besides initial investment, and they're all variable based on what kind of technology you get. The little deficiencies multiply together, and they're sensitive to market forces. Humans have zero retooling costs for vaguely-similar work, while machines have to be retooled to assemble the same components on a different bike frame.
Machines essentially have a wage; it's just paid out to all the humans involved in keeping the machine doing its job.
He thinks it's a low number and prefers mass-unemploment and starvation to a moral dilemma.
Actually, Chinese manufacture doesn't start until the Chinese companies provide consultation time with your engineers to rework your product's minor details in such a way as to maximize product quality for a given cost while minimizing cost by improving manufacture speed and reducing manufacture labor.
Chinese manufactories regularly work closely with engineering teams to rework an engineered circuit board into the same circuit with a different physical layout, strengthening weak parts and eliminating complex manufacture steps. That means the end product doesn't fail as often and costs less to make. You also see things like what Kokoon is currently publishing about their experiences, where different materials or assemblies are selected to make a part assemble more-rapidly and prevent it from wearing out as quickly, which, again, both cuts costs and extends the product's lifetime.
The Chinese make efficient use of both human labor and machines. They're very good at manufacturing.
I would definitely love to support a return of manufacturing to America
The only impact of which would be to increase poverty in America.
A cup of coffee requires the barista's labor, the manager's labor, the roasted bean shipper's labor, the roaster's labor, the green bean shipper's labor, the farmer's labor, the chemist's labor (Fertilizer, pesticide), the fuel producer's labor (farm tools, building power, roasting machines), machinist labor, oil miner's labor, power plant engineer labor, water distribution labor (municipal water supply, irrigation), logistics to move all this stuff, payroll, bankers, and the people making the cups.
Actually, stuff made in USA fabs routinely stacks up at 3-8 times the cost of Korean fabs. There's a lot of labor in a fabrication plant.
If we're forming the plastic casing here, that's less-efficient.
Shipping cost is pointless, anyway. The shipping cost of a 40-foot shipping container for import to the U.S. from China is under $1,300; it can carry 40,000 trousers or jackets, at a 6.5 cent per-unit price. The import share of those articles is $6.12--at $3.50/hr Chinese labor, including wages and social insurances.
You're shipping a lot of styrofoam and air in an Insignia TV box.
Most companies (Apple and Microsoft being notable exceptions) have narrow or unstable margins (and even Microsoft has a cycle of loss years and profit years). The average profit margin in U.S. in total is 10%; 90% of income goes to wages.
All wages are paid from revenues; revenues are paid from sales; and sales are paid from income. Making a product requires labor from many people, fractioned together. If you have 100 people at $10/hr making 1,000 widgets per hour, that widget costs $1, and can have a price no lower than $1. Each of those people, in that 1 hour, makes enough money to buy 10 such widgets.
In one sense, those people are trading widgets for other widgets (or food). In another sense, they're trading labor for labor (time). When you make $20/hr, you're essentially trading 1 hour of your time for 2 hours of theirs.
That means money is kind of a closed system. There's a limited amount of income in any time frame, which determines what can be bought and what jobs can exist at that technology level. When you add in trade, you're moving income between isolated trading partners, which works the same way. Central banks can issue more money, allowing banks to give loans, allowing consumers to spend more, which adds money to the system; however, this counters technical progress (which causes deflation) and enables inflation (which makes your loan payments shrink in purchasing power over time). In the end, you're still dealing with trading hours for hours; mucking about with money just creates (and modifies) a representation of that time.
It gets more complex than that.
We can modify time.
Over a 100-year span of time, you can safely increase the level of technology such that productivity goes up by 10 times. If, overnight, you double productivity, then you have a need for half as many workers, and get instant 50% unemployment (this is the fear with automation); that collapses your economy. If you do this slowly over years, you create some unemployed, and then create a need for more jobs as prices fail to keep with inflation: your costs drop because the same wages are paying for less time, so the wage cost lowers, and market pressures still set you at the same general profit margin.
So you get enough technical progress to make 10 times the stuff in the same labor. The same proportion of dollars doesn't reflect the same buying power; or, to put it simply, 1 hour of labor buys 10 times as much stuff. That means even a 10% profit margin is 10 times bigger, because it's 10% of money representing the labor costs of making a thing, and that's kind of huge.
So the answer to your question is complex. The short answer is the profit margins stay the same, in the long-run; and the prices go up to adjust for rising costs (or down to adjust for falling costs--though "down" can be slower if the market isn't experiencing a flurry of change and competition). Those margins would actually have less purchasing power if industries have higher costs.
In the long-run, technical progress as I described drives the entire progression of economies. In the short-term, wage inequality and other opportunistic behaviors create fluctuations. It looks something like this. Trade tends to lower prices; Malthusian growth tends to adjust out any jobs you gain or lose through trade deals etc., so both the job creation argument and the job loss argument (we'll lose jobs if we pay American workers over a certain wage to replace Chinese manufacture--it's $18/hr for men's cotton pants, for example) are meaningless.
Rising costs mean more poverty and poorer people--not poorer rich people, but poorer consumers who have to barter their time against the time of other working-class workers. It is mathematically-impossible to disconnect wealth from the total wage cost of making products.
Yeah, I took econ too.
I've been casually studying lately, and might want to go for an AA in economics just to round out; but mostly, I've looked through economic history and at economic systems, and worked out how everything is connected. The stuff I came up with was insanely beyond everything I'd ever been taught about economics (it's a basic concept in school, hence why everybody knows about supply and demand), but then people started talking about Malthus and pointing to more modern theories, and I realized the gap is a lot smaller.
There is a ceiling on the production capability of SK that is dependent on the total number of assembly lines available for operation.
Yes and no. This is a concern, of course; and you're in principle right.
There is a ceiling on the production capability of anything, and it has to do with the supply chain. In middle-school economics, they tell people scarcity is when demand exceeds supply; it's more-complex than that.
Food, for example, becomes scarce even when the supply of food can easily exceed demand; and an increase in demand causes an increase in supply, until it doesn't. Food becomes scarce when producing a bigger proportion of food (e.g. 10%) requires a larger-than-proportional increase in labor (e.g. 12%), which may happen because fertile land in the proper climate is scarce, or such; and of course you can relieve that by things like fertilizer, pesticides, and GMOs, using the land more-efficiently rather than adding more land. You can still produce more than enough food, just at higher cost; and of course the limit is a matter of rate (else you could use less land) and labor (you NEED more labor to make the same amount of food on lower-yielding land).
So this description of scarcity suggests maybe land is scarce, except you can find a way to use the same amount of land. Labor is available; but more labor costs more. There isn't a limiting good here per se, although land is the closest thing to it; food is what's become more-expensive above a certain demand, however, so food is scarce.
The same happens for production of anything. SK can build more assembly lines for higher production output if that production demand is stable; however, SK will run out of laborers to fill its own needs eventually, or will run out of supply chain goods, or some such. If it's cheap to make chips in SK because SK has a silicon mine (uh, just go with it), it may cost more than twice as much to haul up silicon twice as fast, thus exceeding a certain rate of production causes an increase in labor requirements and thus you have scarcity again. So on and so forth.
The things we get from SK are cheap because they're capable of producing them at the rate needed (not scarce), and because demand is high (many manufactories competing for that profit opportunity). If SK only had 2 or 3 manufactories running at moderate capacity to service minimal demand for specialized goods, there wouldn't be much competition between them--because you're always one customer, everyone's manufactories have 10-year contracts for goods, and those goods are only needed for a few purposes and thus new contracts rarely appear. There are markets that work this way.
During this ramp-up time, prices will either rise, or there will be supply-shortages
Not a long-term stable state. You've made an argument that sudden demand will cause predictable problems, along with some less-predictable ones. That's a valid argument--that's exactly the kind of thinking you should employ when faced with any new situation, because risks must be identified and controlled--but it wasn't my point, and it doesn't make the iron-clad conclusion that more demand means more expensive SK goods. SK isn't necessarily at-capacity.
major shifts in global trade result in massive side effects
This is true. It doesn't apply to SK her
That's an extreme reduction. Intel also builds electronics (chip fabricators) in the U.S., although they're a hell of a lot more expensive than Taiwanese and Korean fabricators--and not just because Intel wants a wide profit (although that's some of it).
The short of it is wages are paid from revenue--from the sale of products. A product's minimum viable sale price is determined, in part, by what share of labor produces it. Let's say 100 people work in a factory at a wage rate of $10/hr, and their work collectively produces 1,000 things per hour. That's 1/1,000 of 1 hour of work per person per thing (3.6 seconds per person), totaling 6 minutes of human labor to make that thing, or $1 per thing made. To pay those workers's wages, you must sell that thing for at least $1 each. Take note you also have to pay for things like maintenance, electricity, the shipping and fuel mining to keep your factory running, and so forth--everything eventually coming down to some human labor somewhere at some wage rate.
Extend this through an entire economy and you have a bunch of people trading their labor time for other labor time. People make different wages--an assertion that their labor is worth more than your labor, and so they work 1 hour and you should give them 2 hours of your labor in compensation. Labor is time, and can't be boxed up and traded; hence we represent this with money.
We have 2% inflation per year. The Federal Treasury adjusts interest rates and issues more money. The banks then can lend money to people today to buy houses and cars which they'll pay off with future labor. That money gets spent, eventually finding its way to workers.
So what happens?
In any given frame of time, all of the income equates to all products and services sold, and all labor used. Note that, in the United States, imports (import goods, outsource labor) aren't counted as income: the business deducts that expense, and another business (or wage worker) in another country receives that money and doesn't report it to the IRS. It's not counted as Personal Income or Taxable Income. That means 100% of all measured income in the United States represents all wages and profits, and all products and services produced and sold in the United States, without representing any foreign labor used, and including any exports. Basically, that's GDP.
If you increase some subset of wages, you increase the labor share of the cost (and price) of a product. That means less to spend on other stuff, thus fewer things bought, less labor, less production, less wealth, less employment.
So Men and Boys's Cotton Trousers and Shorts, Chinese imports. Average $6.12 labor share (import cost is under $1,300 for a 40-foot shipping container containing 40,000 trousers or jackets--6.5 cents per each). Average sale price is $14.97; average Chinese labor worker hour (wages plus social insurance taxes) is $3.50/hr. American GM line worker wage is $21/hr; with payroll taxes and benefits (18%--benefits are as high as 40%, but let's not inflate the numbers), you're talking about $50.57 per pair of pants, on average. With minimum-wage workers, you're talking just over $25, rather than $15.
This gets ridiculous when you start talking about Korean and Taiwanese LCD panels, integrated circuitry, and the like. The labor share of the import is $487 for a $500 50-inch TV. The same adjustments get you a $3,200 TV; it might be as little as $1,400, using some extreme assumptions about just how much we can abuse our American factory workers.
Here's the rub: Malthusian population growth describes populations growing faster in abundance, and slower when not in abundance. In context, that means jobs lost to or gained from trade (either can happen) are buffed out over time: 5 years after new trade creates a boom of new jobs, there's enough active labor to fill us back to 5% unemployment; 5 years after new trade sucks away 100,000 American jobs, the labor force has shrunk already. The labor force
America has the concept of case law, in which we determine what the law was supposed to do, and whether it makes sense in context. That's why we have things like the reasonable person test, and why we might identify that "conversation is not copyrightable" and "conversation is only possible via written word in this context" would lead a court to decide that said written word is not copyright, while also pointing to a poem in the middle of said written word and claiming that is a creative work and is thus copyrighted even though everything else in the message isn't.
If it didn't work that way, you could lie in courts and commit fraud under the defense of freedom of expression. A lot of Americans like to abuse the ideal of freedom of speech and claim a bunch of legal shit because of a lack of understanding of the law like that. That misunderstanding is also why we got the whole religion argument (e.g. a courtroom can't display a religious symbol like a cross or a statue in America): people interpreted "freedom of religion" by way of "congress shall make no law restricting the free exercise of religion" to mean "freedom from religion", and claimed separation of church and state is in the constitution, and that the government can in no way display any sort of religion-related thing. The courts actually upheld that one, even though it's ludicrous.
Our legal system is complex because case law overrides all law, including constitutional law--the Supreme Court will rule on if a ruling or law is constitutional, and thus decide what the constitution means by what it says. State law trumps Federal law, except we pretend it doesn't; and constitutional law outlines the limits of Federal and State legal powers, including that any powers neither explicitly granted to the Federal government nor forbidden from the States fall to the States or the people in the states. Then you have loonies who think the Constitution is a perfect, inviolable, holy scripture that can in no way be incorrect or sub-optimal, and claim anything they don't like is wrong because "it's unconstitutional". They seem to forget the constitution originally allowed states to ban women and black people from voting--things we fixed by a complicated legal process of ratifying new amendments to the constitution by a vote of the states.
Our laws are complex. Our legal system has some serious flaws.
Building electronics in the US would just produce expensive electronics gadgets and more US poverty.
Actually, the higher the wages you pay, the fewer net jobs you create. My calculations on Men and Boys's Cotton Trousers and Shorts (MBCT) imports suggest an $18/hr average wage for the entire chain (factory workers, power company supply chain, engineers, machinists, managers, etc.) with an 18% benefits cost (benefits should range 18%-25% of salary, but often range 25%-40%) is break-even against a $3.50/hr Chinese labor cost (wage plus social insurance taxes) and a $14.97 average retail price across all imports in that class.
That is to say: if you pay more than $18/hr, you net lose American jobs; if you pay less, you net-gain American jobs. This actually doesn't matter in the long-run, and I'll cover the mechanics below just for completeness.
A GM factory line worker makes $21/hr. At that rate, you would lose around 8,500 American jobs. The $14.97 average price would rise to $50.57, based on $6.12 labor share for MBCT--that's derived by dividing the import price by the number of units. Note that importing a 40-foot shipping container with 40,000 jackets or trousers from China costs under $1,300 or 6.5 cents per unit. If we assume $8.50/hr American minimum wage, the new price of trousers is just over $25.
So that's all interesting, but I said the jobs don't matter.
Malthusian growth: in abundance, population expands; when abundance ends, population growth slows. I had derived this behavior from an examination of scarcity, which I defined as a condition where the labor required to make proportionally more of a good in a certain time frame would increase by a greater proportion. As a simple example: if you grow your population by 10%, you need 10% more food. Food prices stay the same if the number of people in your population making food increases by 10% (so if it's 100,000 farmers, now you need 110,000). If that increase is more (e.g. 112,000--a 12% increase), food is scarce.
My scarcity model above essentially means we can definitely make enough e.g. food for everyone, but increasing food production increases the total percent of all of our labor (and income) spent on food, decreasing what other things we buy. That means more poor people--people who can afford food, but not as much of other things (luxuries)--as well as current poor people struggling to afford food, and some outright failing. We can make it to fill demand, but it's getting pricier.
So imagine jobs become scarce or abundant. Malthusian growth means more or fewer early retirements, higher or lower birth rates, changes in immigration, death by poverty, and so forth tends to eliminate all those extra jobs or all those extra job seekers. Give it a few years (not even a generation) and it no longer matters.
What does matter is those pants costing more. That rise in per-unit cost and thus price is scarcity in practice. Trade is... annoying, when you want spherical cows. Everything I outlined about scarcity holds true over decades; and the short-term instead has dissimilar labor rates. Yes, you can definitely produce more if you need fewer labor-hours to do it; but if you have $20/hr labor vs $10/hr labor, spending the cheap labor for less than twice the time will get you lower prices. It's not strictly-optimal.
More-expensive pants does mean we spend more of our total income on pants.
Income is a rate function: there is only so much income in a given time. Raising a subset of wages concentrates that income in fewer hands, destroying jobs; raising all of those wages requires more money (inflation). Wages essentially pay for a quality-of-living based on a certain amount of time; and revenue pays wages, so higher wages require higher revenue, thus higher prices per product produced using a certain method (technology). That means money's purchasing power is tied to wages and technology; money isn't wealth, and tweaking the amount of money without changing anything else doesn't create wealth.
So we're stuck in the inescapable situation of
Actually, it's cheap because demand is high.
There are many different manufactories in China and Korea. Because of high demand, getting into the manufacturing business--and taking on clientel--is less-risky, and the long-term cost is low. You're not making specialty goods or a specialty service; you are a bulk commodity for which there is huge demand, and you have to deal with competitors who can flourish right along side you--meaning it's one of the other 5,000 firms nabbing your business, instead of some high-risk new-kid company trying to squeeze it's way in as the cheaper alternative.
The prices are set based on cost. There's generally a certain amount of risk in business, including threats (financial losses) and opportunities (market expansion). Those risks have a long-running average, and so need a certain amount of excess profits to cover: your profit has to exceed losses to threats, and has to allow the taking of new opportunities.
To minimize costs of risk, you reduce threats. Opportunities are a more-complex matter: you need more cash flow to pursue them, and you need enough of it to cover the opportunity and the threats. Minimizing your threats means you can take an opportunity without risking a compounding of costs as threats appear soon after, thus a similar amount of profit allows you to grow rapidly, and that growth then raises your profits over your threats. That's because 10% profit is 10% of your business, and 100% growth (doubling in revenue) means your 10% profit represents 20% of your pre-growth business, while your 1% risk cost represents 0.1% of your pre-growth business or 0.05% of your current-size enterprise. You can catch up on risks if you can grow faster than they can mount, including threats (bigger business = recover those small lost costs faster) and opportunities (bigger business = more cash flow to outlay on new opportunities).
So prices come down to market pressures from competition, which increase with more demand; and costs, which include risks and labor. Outsourced services (buying from other companies) includes the provider's profits, which are a function of these things as well (negotiation pressure is a function of demand). Scarcity is a matter of cost, as well: typically, supply chain issues aren't so much as "running out" as they are that you can get more if you can pay more people (e.g. a mine that has all of its rich ore veins mined out produces half as much ore per cubic meter of volume dug? You have to dig twice as much for the same ore--and pay twice as much salary, since you need the diggers working twice the man-hours).
Weird, huh?
No, US people are just dumber than the rest of the world and were sold a line about houses doubling in value every 2-3 years and making them rich as all hell if they bought and then sold in 2 years.
When a bank sells debt, they're still the contracted collector for the income; they simply owe the income on the bond to the purchaser.
Here's the thing: comments on a forum have never been successfully defended in U.S. courts. Speeches--being the creative work of a speechwriter--have been defended; but the USCO has determined speeches given but not written down aren't copyrightable because they aren't a fixed work--even though those speeches are recorded through the incident of being at a public event. The recording is copyrighted--to whoever owned the camera (e.g. CBS); the speech wasn't prepared and fixated, so isn't copyrighted.
Were you to record your speech and then televise it, the recorded speech and its transcript would be copyrighted. It's also copyrighted to you if you have your own people record it, if you had planned to give a speech; yet doing the same in a debate fails to produce a copyrighted work for the speaker, because the speaker's dialogue wasn't a prepared work, and is an incident of the venue (but not owned by the venue).
So the law essentially says speeches are copyright, but not if they're basically given on-the-spot or from memory of a worked speech which you hadn't previously fixated by writing it down or recording it yourself, except in the case where you had appeared on the occasion for the purpose of giving a speech and having it recorded as a fixed work.
Slashdot is a venue. You're having a discussion, which is dialogue. That dialogue is becoming a fixed work at that time. As per the above behavior with speeches and debates, this would be non-copyrightable; and, additionally, the venue only engages through the medium of a fixed work--that is, you can only communicate on the Internet by creating a fixed work (a recording, text, etc.)--therefor jurisprudence would suggest that copyrightability of publicized discussions on the Internet should examine if they are substantially-similar to verbal public discussion. They are.
The only people who have ever claimed forum posts, youtube comments, and the like are copyrightable are forums operators and forum users discussing the copyrightability of their posts. No court has ever found in favor of copyright action against the impromptu text of a forum discussion--although any images you upload as attachments and whatnot, or any works contained therein (e.g. poetry), are obviously copyrightable because they are a separate work embedded into a discussion.
Copyrightability hinges essentially on what is considered a "creative work". A discussion is not considered a creative work. To claim copyright, you must claim that something isn't a discussion.
Ah okay. That seems strange; Canada doesn't seem like a country that would have weak enough regulations for that. Managing interest risk is a huge and complex topic, and most consumers aren't well-educated on the topic; if you were well-educated on every such topic, have 19 Ph.D.s.
In America, banks take interest risk when they give you a fixed-rate mortgage: a change in interest rates means the bank can sell your loan to another bank for more or less money. That means the bank's assets change, and it means capitalization by selling a loan works differently. If interest rates go up and you hold a low-interest loan, then the value of that loan falls. This is important because a loan is an asset: it's an Accounts Receivable, meaning the balance belongs to the bank, and so the bank owns that money. Interest is income, and the portion of your payment that pays the loan down isn't income. The bank can sell that loan to another bank for a portion of the expected interest and take a capital gain, allowing the bank to immediately access liquid funds; but the buyer will want a bigger discount if the interest rate is lower than current rates.
In the U.S., we have 30-year and 15-year fixed-rate mortgages. You pay a higher interest rate on a 30-year than a 15-year; and you pay a higher interest rate on a fixed-rate loan than you do on an adjustable-rate mortgage. This is because a 15-year loan takes a risk across 15 years; the 30-year loan takes risks 15 years beyond that, which are harder to predict, and thus more dangerous.
ARMs are cheaper. A 30-year fixed rate might be 4.25% while a 5/5 ARM is 4.125%. When you buy an ARM, you and the bank make a contract: you agree to a certain exposure to risk, and the bank agrees to limit your risk. For Penfed's 5/5 ARM, the limits are that your interest rate can adjust only once every 5 years, only increase by 2% in any adjustment, and only increase by a total of 5% above the original interest rate over the entire life of the loan. The bank takes interest risk in that every 5-year span following an adjustment is subject to market fluctuations yet does not subject your loan to interest rate adjustments, and that the amount of adjustment they can make is limited. This is better for the bank than zero adjustment, and it's better for you than the bank changing the interest rate however they want whenever they want.
You can take an ARM when you think you can manage the risk. For example: a 3/1 ARM exposes you to a hell of a lot of risk; while a 5/5 ARM with a 2% or 1% maximum adjustment lets inflation and pay increases more-effectively diminish both the buying power and the proportion of your income represented by the increased payments at each adjustment term. A 15/15 ARM exposes the bank to more risk, and costs you more; but it also lets you get a full 15 years of inflation and pay increases before a larger (6%) adjustment comes. You might also plan to use the lower payments on a 5/5 loan to make extra payments, bringing you under the cost of a 30-year fixed even with maximum adjustments.
If you don't know any of this shit, you essentially pay the bank to cover your risk. The bank charges you more interest and takes bigger payments, and in return they assume 100% of the interest rate risk.
That means a fixed-rate loan allows a wholly-ignorant consumer to avoid planning long-term financial management and preparing for financial risk events over periods spanning decades, instead telling some highly-skilled statisticians at the bank to figure out how much risk there is and adjust it into the loan. The uneducated consumer just has to ask, "Can I afford this, and is my income probably stable or growing over the next 15 or 30 years?" He doesn't have to look at ARM adjustment periods and lifetime maximums and determine what his income will look like and how he can mitigate any increases to improve his financial position. He also doesn't risk being wrong--such as by determining he'll come ahead with an increase up to 1.4% in 5
You have 100% control over the loan terms. US Bank offerings include conventional (fixed) and ARM. Penfed has better offerings, with 15/15 and 5/5 ARMs. Penfed's 5/5 ARM declares the following:
Rate is variable and can increase by no more than 2 percentage points after the initial five year period and at each subsequent rate adjustment, with a lifetime maximum adjustment of 5%
So a Penfed 5/5 ARM taken in 2015 at 4% can increase to 6% in 2020, 8% in 2025, and only 9% in 2030; that loan would be contractually-prohibited from increasing at a faster rate, and from increasing above 9%. Penfed's 3/1 ARM also allows 2% adjustments, to a maximum of 6%. Their 15/15 can increase by a maximum of 6% points, once, at 15 years (e.g. a 2015 mortgage at 4% can increase to 10% in 2030, but no higher).
The choice is yours.
Well don't buy an adjustable-rate mortgage. What country do you live in that makes you enter a 30-year contract that involves a lot of debt and give the seller the right to change how much you're contractually-obligated to pay?